Best use of $5k annual premium for retirement cash?

[DHK]

Every time you make a withdrawal, you lose the compounding of what that money can do for you.

That $25,000 doesn't just cost you the $25,000... but all the earnings that $25,000 would be earning for you if you left it there. That's an opportunity cost.

Instead of forfeiting it all, one can either:
a) Borrow against against eligible securities via margin loan. The securities would continue to rise (and fall) and the borrower would just have to make sure the loan stays current and the leveraged securities value constant or rising. If the securities value falls against the borrowed amount, the difference is due in 3 days (I believe).

Margin Call

b) Borrow against cash values in life insurance. The original cash values would continue to grow as though you never touched it, however, any loan interest not paid out of pocket, would be deducted against the cash values and/or current earnings.

In either case, you can have your original values continue to grow, if you're willing to pay loan interest and/or take on the margin loan risk with eligible securities.

 

[Golfnut2112]

Yes, that's obvious. However, I have yet to see a financial advisor or planner make someone rich.

Robert Kiyosaki says there are 3 kinds of financial plans:
1. Safe & Secure
2. Comfortable
3. Rich

We can help a lot of people with #1 & #2. But for "rich" people, the advice is different. We help to preserve the wealth and the value of their business, intellectual capital, real estate, etc. They make themselves rich, and advisors are there to help preserve and pass on that wealth in a tax-efficient manner.

Advisors don't make people rich. I'd love to see one example of where an advisor made someone rich.

https://davidkinderfinancial.wixsit...s-Your-Financial-Planning-Pyramid-UPSIDE-DOWN

This post really makes no sense. Your saying people that are rich don’t invest money with advisors and we are here just to preserve wealth and pass on that wealth in a tax efficient manner? I have a client that invested $500,000 back in 1992 and as of yesterday the value of her account was 4.8 million and that was after a withdrawal to buy a condo in Florida. The account is a TOD account that will pass tax-free to her beneficiaries. Robert needs to add a few more types of plans because there are a lot of people between his 2 and 3.

 

[Golfnut2112]

Every time you make a withdrawal, you lose the compounding of what that money can do for you.

That $25,000 doesn't just cost you the $25,000... but all the earnings that $25,000 would be earning for you if you left it there. That's an opportunity cost.

Instead of forfeiting it all, one can either:
a) Borrow against against eligible securities via margin loan. The securities would continue to rise (and fall) and the borrower would just have to make sure the loan stays current and the leveraged securities value constant or rising. If the securities value falls against the borrowed amount, the difference is due in 3 days (I believe).

Margin Call

b) Borrow against cash values in life insurance. The original cash values would continue to grow as though you never touched it, however, any loan interest not paid out of pocket, would be deducted against the cash values and/or current earnings.

In either case, you can have your original values continue to grow, if you're willing to pay loan interest and/or take on the margin loan risk with eligible securities.

A margin loan is nothing like you explained it, I would read up on that.

 

[DHK]

A margin loan does not have to be used to purchase more securities.

Okay, it could be a non-purpose loan.

Non-Purpose Loan

 

[DHK]

Your saying people that are rich don’t invest money with advisors

No, I'm saying that advisors don't make people rich.

Good job on that 8.75% average rate of return for $500k to $4.8 million over 27 years... but, to me, that's not rich.

I guess, to me, rich = entrepreneurial.

 

[Golfnut2112]

No, I'm saying that advisors don't make people rich.

Good job on that 8.75% average rate of return for $500k to $4.8 million over 27 years... but, to me, that's not rich.

I guess, to me, rich = entrepreneurial.

Your definitely in the minority. Most people would take $4.8 mill, a condo in Florida and get it without doing a thing. If I was not referred to her she probably would have put that money in the bank at less than a percent.

 

[Golfnut2112]

A margin loan does not have to be used to purchase more securities.

Okay, it could be a non-purpose loan.

Non-Purpose Loan

Your getting into some really rare loans. Most people just sell what they need to buy something.

 

[jboussea]

I can’t believe all discussion about life insurance. The OP stated that the guy does not need a death benefit, is 52 and trying to accumulate money. If the guy qualifies for a Roth that’s what should be recommended.

The OP actually asked about WL & IUL specifically.. someone else mentioned Roth.

Funny thing about this thread is no one knows what is ideal for him because there is not enough information... just answer the question asked. .. It's a WL or IUL questions... We don't even have a time horizon.. He said he'll pay for 15 years but no one knows if he's actually taking the money in 15 years.

The time horizon might be a problem .. but it all depends on the purpose of the policy .. is it his primary source of income or does he have another source .. the WL or IUL might just be an emergency fund that accumulates faster than a CD at that point ..

who knows?

nobody knows..

but nobody is willing to say that they don't know ...

 

[DHK]

Your getting into some really rare loans. Most people just sell what they need to buy something.

And that pattern greatly erodes a lot of middle income American's long-term wealth-building.

John Cummuta explains the problem rather well in about 5 minutes.

 

[Golfnut2112]

That guy is scary!!!! Don’t know who he is but he sure in the hell does not know what he is talking about, I’ll bet his compliance department loves him. The problem with the video is the guy has an agenda I did not watch the whole thing I quit after his interest payment comment, how do you compound interest with interest? At the very best you get a wash loan so you break even, or you PAY interest to the insurance company. Using life insurance as a bank is ridiculous, once again I sell life insurance but I sell it for what it is, a death benefit, the cash value is an extra benefit. You really need to get a hypo from a fund company using a middle of the road fund such as the franklin income or income fund of America then showing withdrawals coming out then maybe you will understand how it works before watching silly videos.